[Click e Stocks] KT&G, Expected Beneficiary of Post-Corona Era

[Asia Economy Reporter Junho Hwang] KB Securities announced on the 20th that it maintains the target price of KT&G at 110,000 won, as suggested last year.

KB Securities views KT&G as a beneficiary stock in the post-COVID-19 era, expecting a significant recovery in duty-free cigarettes and red ginseng from the second half of this year. Accordingly, it revised its net profit estimates upward by 4.3% and 0.5% for this year and next year, respectively. The consolidated sales for the fourth quarter are projected at 1.338 trillion won, with an operating profit of 318 billion won. In terms of operating profit, this meets market expectations.

By business segment, in the manufactured tobacco business, exports of cigarettes to the UAE and NGP (Next Generation Product) to PMI (Philip Morris International) are expected to increase by 121.5% (YoY). The recovery in exports to the Middle East is expected to continue until the first half of this year, and from the second half, the duty-free channel will recover, leading to an increase in sales of high-margin duty-free cigarettes. The real estate business is expected to record sales of 218 billion won in the fourth quarter of last year and 540 billion won this year from the sale of Suwon Hwaseo Park Prugio phases 1 and 2, while KGC is expected to see increased sales due to overseas demand.